Gas prices in Toronto to rise in 2024, but only temporarily. Here's why

It’s likely that Canada will see a slight spike in gas prices in the New Year but an expert expects the cost to eventually normalize, keeping the price of filling up stable well into 2024.

According to Michael Manjuris, Chair of Global Management Studies at the Toronto Metropolitan University, an increase to the carbon tax will cause a 2.5 to 2.6 per cent rise per-litre in the cost of gas going into 2024.

However, he says the price of crude oil is likely to lower, making the overall cost of gasoline potentially lower, too.

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Why? Inventory in the United States.

“The reason we’re seeing a kind of stability, or flattening of that raw material price is because of the higher inventories in the United States currently,” Manjuris said. “And the predicted lower demand from China. So, overall, we shouldn’t see significant increases in gasoline (prices) over the course of 2024.”

In 2022 gas prices surged due to a number of geopolitical factors and at one point hit a record 214.9 cents per litre in the GTA.

Since then prices have normalized but have remained higher than the pre-2022 norm.

Earlier this month gas prices hit a multi-month low of 139.9 cents per litre in the GTA and Manjuris expects the trend to largely continue into 2024.

Manjuris said that there are a number of reasons for the more stable outlook including, believe it or not, the upcoming U.S. presidential election.

Historically, election years in the United States provide a bit of stability in terms of gas prices in the U.S. --- and that’s because gas prices are an election issue, he says.

“Why the U.S. is increasing its inventory of crude oil is because they’re trying to manage the price of gasoline, “ he said.

SO WHAT DOES THAT MEAN FOR CANADA?

The main difference between Canadian and American prices is in how it’s taxed.

In Ontario, the province’s sales tax is 13 per cent and its fuel tax is nine cents a litre after the Ford government extended a temporary cut until June 30, 2024.

Manjuris said that Ontario is “not seeing is a significant increase in the demand of gasoline,” which should keep any sustained runs ups in price to a minimum.

Instead, it’s more likely that “wildcard” events cause price increases from time to time, he said. “Wildcard” events are what Manjuris calls something that is difficult to predict, like the war in Ukraine or the conflict between Israel and Gaza.

Most recently, there have been attacks in the Red Sea on commerical ships by Yemen's Houthi rebels, which have caused some oil companies to pause transit through the corridor.

"If those kinds of things continue to happen, they can affect supply at least in the short run, and when that happens, we tend to see at least a bit of a spike in the price of oil,” he said. “I’m not predicting that, not in the near term at least, but as I say, it’s a wildcard. It’s one of those things that globally, that’s unexpected.”